Using a Credit Card Hardship Program
Consumers who are struggling with monthly credit card payments might be surprised to learn of a helpful program that is rarely discussed. These consumers have likely looked for help and advice from friends and family and may have even looked for help online or from financial institutions. There is one type of program that is rarely advertised, making it hard to find, but it might just be what struggling consumers are looking for. It’s called a hardship program and just about every creditor has one. For those struggling in the short-term, this type of program could be a great option. We are going to cover the basics of how to find out more about these programs, how to maximize their effectiveness, and how to avoid certain pitfalls. We’ll also explain a few similar programs and try to clarify the differences.
What is a credit card hardship program, anyway?
A hardship program is a form of short-term payment relief that is sometimes offered to consumers who are struggling to meet their financial commitments. These are typically administered in response to a job loss, medical circumstances, or other unforeseen financial difficulties. Typically, the creditor provides a lower interest rate along with some other concessions (for example: waived fees). These programs typically last between six months and one year and are usually dropped if the consumer misses a payment.
The program allows the consumer to retain a realistic pay schedule and overall level of financial commitment. At the same time, it helps the creditor ensure that it will continue to get steady payments from the debtor, and the creditor hopes that this leads to less complications than charging off the account, sending the account to collections, etc.
How do I enroll in a hardship program?
As a rule, hardship programs are not advertised. As you can imagine, it’s not in credit card companies’ best interest to tell consumers “If you can’t pay, let us know.” Instead, consumers have to call the creditor directly and initiate a conversation. But, it’s not quite as simple as it sounds. There are some important points to keep in mind when inquiring about a hardship program:
#1 Talk to the right person
When you call your creditor, ask for the hardship department or to speak to someone in “customer assistance.” In some cases, there might be a number for a hardship program on the back or bottom of your credit card statement. If not, use the general number and ask. If you get strange or unhelpful responses, hang up and call again later.
Once you do get someone from the hardship program on the phone, you still want to make sure that you get the help you need. Like with most departments, there are hierarchies in the decision making process. You may need to ask to speak to someone higher up, or try calling again later.
#2 Don’t say too much
You don’t want to give away too much information about your situation right away. Think of your initial call as an inquiry rather than a done deal.
Ask questions about the specifics of the plan, including what arrangements can be made for borrowers. Once you feel comfortable, you can begin to talk about the specifics of your situation (it’s helpful to have a copy of your budget handy). Just keep in mind that creditors may be able to make modifications to your account based on the conversation you have. For instance, if you express difficulty to pay, your credit limit could be lowered or access to your account could be limited. It’s also important that you don’t promise more than you can pay.
#3 Say enough
You can’t hide the specifics of your situation and get on a hardship program. The key is to inquire first, determine how the program will fit into your budget, and then make a decision. When you commit to the hardship option, be specific and firm. Have a number in mind and be willing to say “This is what I can afford.” Some creditors may have the flexibility to work with you on this, while others may be more rigid and less willing to negotiate.
#4 Ask about credit reporting
This is one of the most important questions you can ask when inquiring about a hardship. If you are on the fence, this could be a deciding factor.
Ask, specifically, what type of notation will be sent to the credit bureaus. Also, know that in most cases the creditor will make you close the account in order to participate in this program. While this can lead to a ding in your credit score, the blow will be a little softer if the account is reported as “closed by consumer.” Talk to the representative and try to have the account closed by consumer instead of “closed by creditor.” Also, if the creditor reports that you make full and on-time payments as part of the program, your score should increase again.
Other Debt Management Options
A hardship program is a great resource for consumers who find themselves struggling with credit on a short-term basis. But for consumers who are deeper in debt or have other financial difficulties, there might be better options. One such option is what the FDIC refers to as a “workout program,” which is essentially a hardship program designed for those with long-term difficulties.
Another option is the debt management plan, and this can actually be used in conjunction with a credit card hardship program. In a debt management plan with a nonprofit credit counseling agency like Clearpoint, a credit counselor serves as mediator between the debtor and creditor. This is similar to a hardship program in the sense that the debtor is seeking a modified repayment program with some concessions.
At Clearpoint, we have a long standing relationship with many creditors. They know that when consumers come to us for help, they are serious about repaying their debts. Because of this, the creditors typically offer benefits like reduced interest rates, waived late charges, and waived over-the-limit fees. And in some cases, these benefits are better than they offer to consumers who just use their hardship program. But, there are still some creditors who don’t allow the use of debt management plans and only make arrangements internally in the form of a hardship program. So, in many cases, consumers can use a combination of debt management and a hardship program.
If you think that reduced interest and waived fees could help you get back on track financially, then talk to a credit counselor to see if you qualify for a debt management program. It all starts with a free counseling session and budget review.
My husband and I have cc issues they are all delinquent. We had a heartship my husband got laid off and we had to choose to try to save are house and not pay are cc bills now I just want to get them paid but can’t afford to do so any ideas
Hi Nicole! I’m really sorry about this tough situation. I’d suggest you reach out and schedule a free credit counseling session with our team.
You haven’t answered Lisa Dipzinski’s question. 7 months ago! js
ustedes tiene alguien quien pueda informar mejor en Castellano
Ola Marianela! Si, podemos ayudar en Castellano!
hi ..is it normal to be in 5 months in a program and balance on card only dropped 3 bucks ..make it clear its not your company ..worries me
Hi Jesse! That sounds like you might be paying fees or something similar. I would definitely dig into this more! Hope that helps!
I would be happy with a lowere APR, and waive fees, then I can make double the payment, so what are a few things I need to do? Call each credit card and ask if they participate in the hardship grogram?
That’s a good starting point, though they may ask for verification of income, etc. to qualify for their programs. In other cases, you might be able simply to negotiate with them. The other option is a Debt Management Program, which Clearpoint offers. In that case, Clearpoint would manage the relationships with creditors (providing lower rates, etc.), and you would pay a nominal fee, and submit your payments, to Clearpoint.
Reading through your FAQ and I don’t understand how closing your credit cards would not hurt your credit score? It definitely will, especially your credit history.
Are you referring to this page or a different one? All we’re saying here is that there is a slightly preferred way to close an account in this situation–having it notated that you (the consumer) closed it instead of the creditor.
Even in the consumer closes it that could still hurt them by closes them too quickly or closing too many.
Absolutely, closing can definitely hurt (another reason is when it lowers the average age of the accounts). But this notation of “by consumer” is still preferable.
I co-signed for my nephews student loans and his payment is $1020/month and he inquired through the lender “Wells Fargo” about being able to lower his payment. They informed him of a “Hardship Option”. I, as the co-signer must agree to this as well. My question is how will this affect my credit score. My score presently is 780.
I just got a letter or benefits department I just like to Close my account with my credit cards that I have or will they stay open if I do it
Sorry, Bonnie, I’m not sure I follow exactly what you mean. Can you clarify?
I need help bad.
Why don’t you give us a call at 877-877-1995 so we can try to help and point you in the right direction.
I am currently on Disability for about 1yr, I have been living on credit cards to make it. I want out of debit but seem to struggle from month to month. This has been very difficult for me as I am 60yrs old and in 2008 crash I lost everything, Then my health has suffered enough to be on disability. I have 58k in cc debit what do I do??
One of our counselors would be more than happy to talk through this with you! They can look at all the details that would affect your decision moving forward, and will have some great advice for you. You might also consider consulting a bankruptcy attorney to learn more about that option and how it would impact you.
I just submitted an application with an error on it…. “content removed”
You will have the opportunity to discuss this with your counselor, and it shouldn’t be a problem. Thank you for letting us know.
hi there lm searching for hardship programs or dept management program I lost my job on 10-9-2014 I have a loan and one furniture bill to pay and the longer I don’t pay the higher the bill gets I’ve been still searching for a job nothing yet has happened. for the last couple of month’s has took toled on me. it has been the worst months I ever experience its been a rough time for the last few month.I really want to find away to do everything I can with some help.please if you guys can help me I really would appresate the help and if there’s any info or where to begin with what the next step is that would be great
A counselor can talk through this with you and explore your options. You can call 800-750-2227 or get started with our online form here: https://www.clearpoint.org/get-started/
Have you contacted the lenders directly for these two loans? That would be another good starting point. If you explain your situation (job loss) and current income, they may be able to present you with some options, too. Best of luck, and I hope that we hear from you.
Hi there, I’m searching for a hardship program or a debt management program. I lost my job back in October 2014 due to budget cuts at the hospital. I’ve had help from my family thankfully with helping me pay bills. I did end up finding a part time holiday/seasonal job that pays minimum wage, which was not at all even cutting it close to helping me get throigh the last couple months. I’ve never experienced this before. I relied on my credit card for groceries, gas, and very minimal needs these past few months. It’s been the worst experience I’ve ever dealt with. I’m all sorts of worried for my future. I thankfully have a Fulltime job offer back in healthcare starting 1/25/15. It’s been a rough past few months. With the new year I really want to find a way to pay off all of my debt. I do not want to have to rely on a credit card again nor my family. I need all the help I can get, including credit counseling. Please help me. If there’s any info or where to begin with what the next step is that would be great! Thank you very much
I’m sorry to hear about all that you’re going through but we can definitely help. To get started with a free budget and credit counseling session, you just need to fill out a form or call us directly at 800.750.2227.
Your counselor will review your overall financial situation and help you develop a plan, which could include a debt management plan. Best of luck to you!
Hello, I am searching for the credit card hardship program. I would like to know how the program works based on my debt/income to see if I can clear my high amount credit card debt that I am having hard time to keep up. I have made the pavements on time but only minimum bases only.
Please send me the email if you need any info from me to get evaluated.
Thanks for reaching out (I’ve edited the comment to remove your email address). We don’t provide “hardship programs” as those are offered directly by creditors. We do offer free credit counseling, though, and a debt management program which sounds like it might be of use to you. I’m passing along your information to customer service so that someone can contact you and take a deeper look at your situation. You’re also welcome to call us at 877-877-1995.
Please send information about the hardship program
We offer a debt management program for consumers who are struggling with multiple creditors. If you are looking for a “hardship” program, you will need to contact the specific creditor.